Kering plans to keep a stake in Puma for at least six months

"Through [holding company] Artémis, I intend to stay with Puma in the relatively long term, as I did when I remained a shareholder in [retail chain] FNAC." After the presentation of Kering's financial results, François-Henri Pinault gave more details about his vision for the future of Puma.

Through one of its subsidiaries, Kering owns 86.25% of Puma's outstanding shares, and has decided it will keep a 15.85% stake in the sport brand, distributing the rest of the shares to Kering shareholders. In a document, it stated that "in addition to the distribution of an ordinary annual dividend of €6.00 per share, at the AGM of 26 April 2018, Kering shareholders will be asked to decide on the extraordinary distribution of 10,523,276 Puma shares (out of the 12,891,834 Puma shares held by Kering) for the amount of 1 Puma share for every 12 Kering shares held." The payment date will be 16 May, based on the Puma share price on the Frankfurt Stock Exchange.

Artémis, the Pinault family's holding company, which owns a 40.9% stake in Kering, stated it will retain a 29% share in Puma’s equity. Puma’s floating capital will therefore rise to 55%, as opposed to the current 14%.

Kering's objective is clearly to dispel doubts on Puma’s future and on that of its share price. At the Kering results presentation, Jean-François Palus, the group's General Manager, spent some time emphasising Puma's strengths. He first focused on the recovery engineered in the last few years by CEO Bjorn Gulden and his management team. "A recovery that translated into a strong growth in revenue, which rose 39% between 2013 and 2017, while operating income grew 3.9 times in the period," he said. "At the same time, [Puma's] stock market capitalisation increased by €2 billion."

Palus listed Puma's best-selling models and the music and social media stars who endorse the brand. This led him to focus on the growth potential of Puma, which is "well-placed to perform strongly in the short and medium term." The brand does 80% of its business via the wholesale channel, and is now in a position to expand its monobrand store network, and also relies on its new e-tail site to grow this distribution channel.

The prospect of an improvement in Puma's operating margin, which was 5.9% in 2017, is another argument for convincing Kering shareholders to approve the group's plan. The payment of a dividend of €12.50 per share will generate €162 million for Kering. The group also stated that "based on Puma's closing share price on 29 December 2017, the consolidated capital gain is expected to reach €325.5 million before tax and €316.2 million after tax." That's more or less the amount invested by PPR to purchase the German brand in 2007.

The plan stipulates that Kering will retain its Puma shares for six months, and that Artémis will retain its stake for at least a year. As a reference, Kering sold its stake in FNAC in 2013, but Artémis sold its FNAC-Darty shares only in the summer of 2017.